Neutral Citation No. 2026:JHHC:21218 IN THE HIGH COURT OF JHARKHAND AT RANCHI M. A. No. 20 of 2013 Manager, United India Insurance Co. Ltd., Ranjan Complex, Ranchi Road, At, P.O. & P.S. Biharsharif, District- Nalanda. ... Opp. Party No.2/Appellant Versus 1. Shibu Manjhi, son of Late Anand Lal Manjhi, 2. Lalchand Manjhi, son of Late Anand Lal Manjhi, 3. Urmila Kumari, daughter of Late Anand Lal Manjhi, 4. Sudhila Kumari, daughter of Late Anand Lal Manjhi, All residents of village Jobala, P.O. Bakra Chumba, P.S. Mandhu (Kuju), District – Hazaribagh. ... Claimants/Respondents 5. Sri Niwas Sharma, son of Bhagwan Sharma, resident of Village, P.O. & P.S. Bagodar, District- Giridih (Owner) … Opp. Party No.1/Respondent 6. Ram Pravesh Kumar, son of Sukan Yadav, Resident of Village & P.O.- Dewkuli, P.S. Kakhdumpur, District – Jehanabad (Bihar) … Opp. Party No.3/Respondent --------- CORAM: HON’BLE THE CHIEF JUSTICE --------- For the Appellant: Mr Alok Lal, Advocate For Resp. Nos.1-5: Mr Vijay Kumar Sharma, Advocate Mr. Binod Kumar Dubey, Advocate --------- 17/Dated: 18.07.2026 1. Heard learned counsel for the parties. 2. In this case, the learned counsel for the respondents-claimants has informed that original claimant no. 1, Rukmini Devi, has expired. Accordingly, her name has been deleted vide order dated 17.07.2026, and the case has proceeded since the children of Rukmini Devi are already on record. Neutral Citation No. 2026:JHHC:21218 3. The appellant-Insurance Company challenges the judgment and award dated 19.10.2012 in Claims Case No. 03 of 2005 passed by Motor Vehicle Accident Claims Tribunal at Hazaribagh. 4. Mr Alok Lal, the learned counsel for the appellant-Insurance Company, has raised only one contention in this appeal. He submitted that the cover note was issued to the owner of the offending vehicle based upon the owner issuing a cheque for the premium amount of Rs. 12,247/-. However, this cheque was dishonoured and therefore, the cover note was cancelled, and intimation of such cancellation was duly served upon the owner of the offending vehicle. He submitted that in such circumstances, there was no insurance cover or insurance policy in existence at the time of the accident and the Tribunal, therefore, could not have held the appellant-Insurance Company liable for making any payment. 5. Mr Alok Lal relied on Section 64-VB of the Insurance Act and Regulation 4 of the Insurance Regulatory and Development Authority (Manner of Receipt of Premium) Regulations, 2002, to support his contention. 6. Mr Alok Lal also relied on the following decisions to support his contentions: - (i) The Oriental Insurance Co. Ltd v. Raveendran M.V. Moozhayil House & Ors, 2014 Supreme(Ker)744. (ii) National Insurance Co. Ltd. v. Khelli Bai, 2005 0 Supreme(MP) 905 Neutral Citation No. 2026:JHHC:21218 (iii) The New India Assurance Company Ltd v. Niyati Mahato and Others passed by this Court in M.A. No. 346 of 2023 order dated 16.07.2025. (iv) Deddappa and Ors. v. The Branch Manager, National Insurance Co. Ltd, Civil Appeal No. 5829 of 2007 decided on 12.12.2007 by Hon’ble Apex Court, 7. Mr Vijay Kumar, the learned counsel for the claimants, submitted that in this case a pay and recovery order has been made because there is no evidence that the cancellation of the cover note was ever intimated to the owner of the offending vehicle. He submitted that in the absence of such intimation, the law laid down in National Insurance Co. Ltd. v. Abhaysing Pratapsing Waghela, (2008) 9 SCC 133, and New India Assurance Co. Ltd. v. Rula, (2000) 3 SCC 195, would apply. He also submitted that since only a pay and recovery order has been made, no prejudice has been occasioned to the appellant and therefore, this Court should not allow this appeal. He submitted that in view of the meagre amount awarded in this matter, if the appellant-Insurance Company is held not to be liable, then it will be almost impossible for the claimants to recover the compensation from the owner of the offending vehicle. 8. The rival contentions now fall for my determination. 9. In this case, Mr Alok Lal, the learned counsel for the appellant- Insurance Company, pointed out to the plea raised by the Insurance Neutral Citation No. 2026:JHHC:21218 Company in paragraph 1 of its written statement. The same reads as follows: - “1. That the claim petition is not legally maintainable because the premium Cheque paid by the Opp. Party No. 1 owner of the vehicle No. JH 11 0492 (Truck) was dishonoured, so United India Insurance Co. Ltd. Branch –Biharsharif had cancelled the Cover Note No. 58678. Thus the vehicle in question was not insured on the date of alleged accident. Hence the Opp. Party No. 2 United India Insurance Co. Ltd. is not liable to pay any compensation for the alleged accident.” 10. At the outset, it is necessary to note that though the plea of dishonor and cancellation of the Cover Note No. 58678 has been taken in the aforesaid paragraph 1 of the written statement of the appellant- Insurance Company, no particulars about the date of the cheque, the date of its dishonor, the date of cancellation, and most crucially, the date of intimation of the cancellation to the owner of the offending vehicle have been pleaded. 11. Mr Alok Lal, however, correctly referred to the evidence of Praveen Kumar Singh, the Manager of the appellant-Insurance Company at Hazaribagh. This witness has stated that upon the receipt of the cheque in an amount of Rs. 12,247/-, a cover note bearing no. 58678 was issued to the owner of the offending vehicle accepting the insurance risk for the period between 20.01.2003 to 19.01.2004. However, this witness has also deposed that the cheque for premium was dishonoured and consequently, this cover note was cancelled. Neutral Citation No. 2026:JHHC:21218 12. Though the intimation from the bank regarding the dishonour of the cheque and the cancellation of the cover note have been produced in evidence, there is no evidence about the intimation of this cancellation to the owner of the offending vehicle, who was admittedly issued the cover note. In the cross-examination, this witness was categorically asked as to whether he could say anything about the intimation of the cancellation to the owner of the offending vehicle. This witness has candidly admitted that he could not say anything about the receipt of the cancellation of the cover note by the owner of the offending vehicle. The question, therefore, is whether in the above circumstances, any case is made out to interfere with the pay and recovery order made by the Tribunal vide the impugned award. 13. Section 64-VB of the Insurance Act and Regulation 4 of the 2002 Regulations no doubt provide that in all cases risks covered by the policy issued by an insurer, the attachment of risk to an insurer shall commence only after the receipt of premium by the insurer. However, once a cover note is issued and further, such cover note is cancelled on account of dishonour of cheque towards premium, the requirement of intimating such cancellation to the owner is also crucial. In this case, there is evidence about the intimation of the cancellation or the receipt of the communication cancelling the cover note by the owner of the offending vehicle. Neutral Citation No. 2026:JHHC:21218 14. In Oriental Insurance Co. Ltd v. Raveendran (supra), the Division Bench of the Kerala High Court has held that if the contract of insurance has been cancelled and such cancellation has been duly intimated as required, the Insurance Company would not be liable to satisfy the claim. Further, such intimation must be issued to the person who applied for insurance cover, and it could also be the RTA. In this case, there is no evidence of intimation to the vehicle owner or, for that matter, the RTA. Therefore, the decision of the Division Bench of the Kerala High Court, far from assisting the case of the appellant, favours the case of the respondents, the claimants herein. 15. In National Insurance Co. Ltd. v. Khelli Bai (supra), the Division Bench of Madhya Pradesh High Court has also noted that prior to the accident, the policy issued in favour of the owner of the offending vehicle was cancelled for non-payment of premium. Further, a memo cancelling the policy was sent to the owner by registered post vide postal receipt vide Exht. D3C. Therefore, the ratio of this decision is that a Court cannot fasten liability against an Insurance Company that had, in fact, cancelled the policy much before the date of the accident, with intimation to the insured. Here, there is no evidence of intimation to the vehicle owner and therefore, the decision in Khelli Bai (supra) is distinguishable. 16. In The New India Assurance Company Ltd. v. Niyati Mahato M.A. No. 346 of 2023 decided by the learned Single Judge of this Neutral Citation No. 2026:JHHC:21218 Court on 16.07.2025, again, the facts set out therein show that the insurance policy or the cover note was not only cancelled, but such cancellation was duly intimated to the owner of the vehicle. SMS delivery report was brought on record during evidence in which it was clearly stated that the message regarding cancellation was issued on 21.11.2017 at 04:16:13 PM and it was delivered on the registered mobile number of the owner, one Natwar Kumar Jha, on 21.11.2017 at 04:16:13 PM. This was also certified by the Officer of the Insurance Company. There was correspondence by which the owner was even requested to surrender the insurance policy for formal cancellation. 17. Considering the above points which were established through evidence, the learned Single Judge set aside the portion of the impugned award that had fastened the liability on the Insurance Company. The learned Single Judge did refer to the decisions in Abhaysing Pratapsing Waghela (supra) and Rula (supra), but held that in the case before it, there was due intimation of the cancellation of the insurance policy, unlike in the cases of Abhaysing Pratapsing Waghela (supra) and Rula (supra). 18. In the case of Abhaysing Pratapsing Waghela (supra), the Hon’ble Supreme Court has held that a cover note issued by the Insurance Company remained valid till it was cancelled. Further, such cancellation is complete upon its intimation to the party to whom such cover note was issued. The Hon’ble Supreme Court explained Neutral Citation No. 2026:JHHC:21218 that a contract of insurance is no doubt to be governed by the terms thereof, but a distinction must be borne in mind between a contract of insurance which has been entered into for the purpose of giving effect to the object and purport of the statute and one which provides for reimbursement of the liability of the owner of the vehicle strictly in terms thereof. 19. In that limited sense, a contract of insurance entered into for the purpose of covering a third-party risk would not be purely contractual. The Court recorded that an ordinary contract of insurance does not have a statutory flavour. The Act merely imposes an obligation on the part of the Insurance Company to reimburse the claimant both in terms of the Act as also the Contract. So far as the liability of the Insurance Company, which comes within the purview of Sections 146 and 147 of the MV Act, is concerned, the same subserves a constitutional goal, namely, social justice. A contract of insurance covering third-party risk must, therefore, be viewed differently vis-à-vis, a contract of insurance qua contract. 20. Similarly, in National Insurance Co. Ltd. v. Laxmi Narain Dhut reported in (2007) 3 SCC 700, the Hon’ble Supreme Court explained that there is no contractual relationship between the third-party and the insurer. Because of the statutory intervention under Section 149, the same becomes operative in essence, and Section 149 provides complete insulation. In the background of statutory provisions, one thing is crystal clear, i.e. the statute is beneficial one qua the third Neutral Citation No. 2026:JHHC:21218 party. But that benefit cannot be extended to the owner of the offending vehicle. The logic of fake licence is to be considered differently in respect of third party and in respect of own damage claims. 21. In Rula (supra), the Hon’ble Supreme Court held that when a cheque received towards premium bounced and, consequently, the policy was cancelled, rights accrued in favour of the third party prior to cancellation of the policy would remain unaffected by the cancellation irrespective of any provisions to the contrary contained in the Contract Act or in the Insurance Act. The Hon’ble Supreme Court explained that the prohibition on the use of motor vehicles without a statutory insurance policy was to enable the third party suffering from injuries from the use of the motor vehicles to get damages irrespective of the financial capacity or solvency of the driver or the owner. This was in the context of section 64-VB of the Insurance Act. 22. Considering the evidence on record in this case and applying the law laid down by the Hon’ble Supreme Court in the above two matters, as also in the cases referred to by Mr Alok Lal, no case is made out to interfere with the pay and recovery order made by the Tribunal in the impugned order. 23. Accordingly, this appeal is liable to be dismissed and is hereby dismissed. Neutral Citation No. 2026:JHHC:21218 24. The accident in this case took place on 16.09.2003. Till date, the claimants have not received any compensation. Accordingly, they are permitted to immediately withdraw the statutory deposit amount of Rs. 25,000/- along with interest if any that shall have accrued thereon by furnishing bank and identity details to the Registry. 25. Similarly, the appellant-Insurance Company is directed to deposit the entire compensation amount in this Court within six weeks from today with due intimation to the learned counsel for the claimants. 26. Upon deposit, the claimants can withdraw the said amount in the same manner as aforesaid. 27. The appeal is dismissed without any order for costs. 28. IAs, if any, pending in this appeal, will not survive and are disposed of. (M. S. Sonak, C.J.) July 18, 2026 A.F.R. Manoj/Sharda/Cp.2 Uploaded on 22.07.2026